A New Wave

The woman who tried to stop the financial meltdown

Maybe it's useless to lay blame for our current financial mess, but I think women, generally, would have been less willing to engage in the extreme risks that spawned financial derivatives - those toxic financial instruments that have brought the world's economy and finances to the brink of failure.

One woman in particular saw the problems posed by these instruments and their lack of regulation and took on three of the best-known (now infamous?) names in the financial sector: Alan Greenspan, Robert Rubin and Arthur Levitt.

Her name is Brooksley Born.(h/t to NWLC's blog, Womenstake) .

From 1996 to 1999 she chaired the Commodity Futures Trading Commission (CFTC), the federal agency which oversees the futures and commodity options markets as well as the individuals who participate in those markets. Her reputation is one of championing the rights of consumers. 

She, a former president of the Stanford Law Review, a public-interest lawyer, and a Clinton appointee to the commission, fought them and Wall Street lobbyists.

Born wanted more regulation of financial derivatives. The other big guns did not.

Some people, notably Warren Buffett, agreed with Born. But, at the time, it was more of an inside-the-beltway power struggle than a decision that would affect the financial livelihood of millions of Americans.

We now know that the largely unregulated market in financial derivatives, particularly in credit default swaps, contributed to the economic collapse that has sent ripples into millions of American homes.

Briefly, here is what Born knew and did:

While on the commission and after becoming its chair, Born sought comments on the need to regulate derivatives, but the request was opposed by then-Federal Reserve chairman Alan Greenspan and Treasury Secretary Robert Rubin. (Lawrence Summers also opposed the request), but it was Rubin, Greenspan and Levitt who ran the well-oiled resistance machine against Born's calls for regulation of the derivatives market, saying that any such efforts would create legal uncertainly about derivative instruments and could destabilize what had become a significant global financial market, in addition to the usual cries about how new regulation might stifle innovation and could result in moving these instruments offshore.

If all of this sounds vaguely familiar, welcome to back to the future redux.

Unfortunately, Born didn't prevail and Congress stripped the commission of any regulatory authority:

Congress inserted something into an agriculture bill that temporarily prevented her agency from taking regulatory action over the derivatives market. Beaten, Born left the commission in 1999.

A year later, Congress passed the Commodity Futures Modernization Act, which took away any power of the agency to regulate over-the-counter derivatives.</i>

This is a snippet of Born's congressional testimony on the need to regulate derivatives:

“Losses resulting from misuse of OTC derivatives instruments or from sales practice abuses in the OTC derivatives market can affect many Americans. Many of us have interests in the corporations, mutual funds, pension funds, insurance companies, municipalities and other entities trading in these instruments.”

Additional information about Brooksley Born is available here, here and here.

Sadder than sad

Actress Natasha Richardson, 45, died Wednesday after suffering a severe head injury earlier in the week at Mont Tremblant ski resort in Montreal, Quebec.

While most of the media identify her more "popular" film roles ("Parent Trap", "Maid in Manhattan"), I remember her for the character of Offred in Margaret Atwood's novel-turned-film (Harold Pinter wrote the 1990 screenplay), "The Handmaid's Tale".  I'm sure others will remember her from their favorite stage and screen roles -- at the young age of 45, she was prolific, as have been all her family members.

She wasn't here nearly long enough, but I'm glad she was here as long as she was. She brought immense talent, grace, intelligence, wit and style to the roles I remember. I can only imagine what she might have been at the age her mother, Vanessa Redgrave, is now.

Cheers to a fine and talented woman and the work she left for us to enjoy. Tears for the family, friends and fans she leaves behind.

AIG bonuses as diversion

ProPublica does a nice job of tracing the timeline of AIG bonuses and points toward one of two larger problems:

In some respects, the sudden anger is mystifying. After all, there’s nothing new about the bonuses except that a portion of them – $165 million – were actually paid on Friday. Contracts instigating the bonuses were made a year ago, and they’ve regularly been in the news in recent months.

And the amount involved is dwarfed by the tens of billions that flowed to banks and hedge funds.

Former Governor Eliot Spitzer agrees, asking why AIG's partners in the mortgage meltdown mess are getting to double-dip taxpayers:

And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure.

Seriously, $165 million is .001 percent of the TARP money AIG has received. 

Sure I understand the anger over giving taxpayer bonuses to executives that sank the company, but shouldn't we and Congress stay focused on the bigger issues: Where did the big chunk of TARP money go? Why were companies that had already received taxpayer funds allowed to collect additional money, funneled through AIG, at what amounts to dollar-for-dollar reimbursement, for their mismanagement and failures?

Finally, for the sane among us: here's a lawyer's view of how best to "claw back" the bonuses, using basic legal principles, something New York attorney general Andrew Cuomo has already begun and upon which Congress and the administration can expand. Under present circumstances (80 percent taxpayer "ownership" of A.I.G.) it isn't a stretch to think that the bonuses could be rescinded on the basis of the company's "functional insolvency," according to Lawrence Cunningham, a George Washington University legal scholar:                 

[snip]

There is also at least some chance, given A.I.G.’s functional insolvency and the government takeover, that these agreements may be rescinded either on the basis of impracticability or by virtue of unforeseeable and uncontrollable circumstances. A credible fact supporting both excuses is precisely the company’s huge loss last quarter. Courts excuse contract duties when governmental action essentially destroys the original purpose of a contract — and the taxpayers’ 80 percent stake in A.I.G. is a more extreme sort of governmental action than usually appears in such cases.

Doing Right By Women and Girls

The president's signing of an Executive Order creating a White House Council on Women and Girls is a small victory with great possibility for ensuring women's equality in myriad ways, from employment to health care, from education to work and family balance.

President Obama understands that this council doesn't exist in a vacuum separate and apart from the policies and programs developed and implemented throughout the federal government and that if women are ever to be on the same footing with their male peers a coordinated and interconnected effort is required at all levels of government.

The White House Council on Women and Girls will ensure that agencies across the federal government, not just a few offices, take into account the particular needs and concerns of women and girls. The Council will begin its work by asking each agency to analyze their current status and ensure that they are focused internally and externally on women.

Were the Department of Labor, for example, to develop guidelines on, say, new "green economy" jobs, there is a real possibility that women won't be forced to put up with discriminatory patterns of hiring, training, promotion and wages -- especially as they existed and became embedded into blue-collar occupations.

Or health care: imagine if HHS, Labor and Commerce were to be fully cognizant of the gender bias that exists in rates for health and other forms of insurance and finally generated changes that made such bias illegal.

Oh, the possibilities.

It's too soon to know how successful the Council will be, but Obama has the right vision: the concerns of women and girls must be integrated into every level of public policy and not treated as something separate and apart from the welfare of the country and the world.

1920-2008: Women's Rights Then and Now

Imagine the thrill and the deep sense of satisfaction among women on August 26, 1920 when Congress ratified the 19th Amendment to the Constitution, giving women the legal right to vote and thus extending voting rights guaranteed to all "men" in the 15th Amendment.

By way of perspective, my maternal grandmother was 15 years old; my paternal grandmother was 30 years old; and my mother was 1-year old. My maternal grandmother, no doubt, danced in the streets or something equally exhilarating, since she was a feminist in every way that counted. She was my introduction to feminism and created a powerful image for me of what was possible: an independent woman who did what made her happy rather than what made her husband happy; a woman who frequently spoke truth to power, in spite of her 5-foot, 4-inch frame, and for whom nothing seemed impossible.

 

 

The non-vetting of Hillary Clinton

I'll have more to say about Obama's VP pick in my blog after I have a chance to review some of the voluminous information on Sen. Biden. 

For now I want to tease out the vetting of VP contenders from the actual discussion about the VP pick. 

Setting aside the harsh feelings and attitudes expressed about Hillary Clinton during the primaries, I think it was a mistake for Obama not to have vetted her for VP, which we are now learning he didn't do.

Bush Administration continues to undermine abortion rights

The ways in which Bush & Co are shredding or completely reformulating federal laws --- as they leave office --- boggles the mind.

That they pay no heed to U.S. Senators and that they use their last months in office to weaken long-established laws and to embolden ideologues leaves little doubt that they won't leave office with a whimper.

The latest effort (which met with stiff Senate opposition several weeks ago) is a revised HHS regulation that will limit women's access to reproductive health care services, including information and access to contraceptives and abortions:

Tim Kaine on Obama's Short List! Really?

Let me preface my comments with this note: I'm not one to really follow the "veepstakes". I consider it a waste of time and energy, especially when, where I live, summer is really short.

However, after several days of online murmers that Virginia Gov. Tim Kaine is at the top of Obama's short list for VP, I have to weigh in.

Temporary Fixes for Housing Crisis

Although he hasn't yet signed the housing bill passed by the Senate this weekend, President Bush removed his objections to the measure and is scheduled to sign it soon.

It's a big band-aid for an even-bigger problem, but it does offer some relief to some homeowners and to local communities where foreclosures have hit hardest. The bill also authorizes new oversight for Fannie Mae and Freddie Mac,and pumps additional funding into FHA:

The bill establishes a $300-billion fund under the Federal Housing Administration to help distressed homeowners get more affordable, government-backed mortgages and get out from under exotic mortgages they cannot afford.

Bernie Mac's lowball, emotionally-stunted humor

On a scale of 1 to 10 - 1 being "really, really outrageous and twisted" misogyny, Bernie Mac's attempts at humor on Friday (at an Obama fundraiser) rank about 3 on my misogyny meter. But Joan Walsh is less incensed than I am:

Anyway, soldiers are dying in Iraq, the mortgage industry is imploding, banks are closing, our civil liberties were seriously eroded this week (with Obama's support) and we're expected to be outraged by Bernie Mac? I'll pass.

Walsh happens to like Bernie Mac's humor. I don't. He's one of a long line of (especially) Black male comedians who use women as comedic punching bags. Friday's fundraiser for Obama was no exception: